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Advantages of automated cash flow management system for SMBs


Discover how small to mid-sized businesses benefit from implementing cash flow management software.

Contents

Chapter 01

Why is an automated cash flow management system important for a small or mid-sized company?

Chapter 02

How can cash flow management software empower small and mid-sized companies?

Chapter 03

Is good cash flow management the only key to survival for businesses?
Chapter 01

Why is an automated cash flow management system important for a small or mid-sized company?


SMBs’ current scenario

Small and mid-sized companies account for 40-50% of economic activity in many countries. They generally face problems in having a positive cash flow. Moreover, an SME doesn’t have a specialized finance team with finance directors and accountants. Most treasury employees have a variety of roles in small businesses.
SMBs don’t have individual departments dedicated to budgeting, A/R, A/P, and Payroll. They are also more vulnerable to cash shortages. Hence, they are more burdened with plenty of tasks.

However, with the proper cash flow management services, they can:

  • Solve all cash flow management problems
  • Reduce the risk of insolvency or lack of funds

Automated cash flow management software can guide cash flow planning with reliable data. In this way, businesses can analyze cash on hand and better understand their financial situation.

How do traditional approaches to cash flow management undermine the integrity of small and mid-size companies?

Over the years, the treasury faced many cash flow management system challenges. Many businesses struggle to collect and analyze financial data. SMEs often need access to growth capital during the expansion phase. But they are unable to improve liquidity due to these challenges:

  • Spreadsheet-based process
  • Decentralized data
  • No data visibility, permissions/access control
  • Lean structure of the budget group
  • No effective risk management strategy
  • Poor borrowing

Businesses need to choose the right cash flow management services to improve their daily operations.

Chapter 02

How can cash flow management software empower small and mid-sized companies?


Advantages of using a cash flow management software

1. Gain real-time cash visibility with automated data gathering

PwC’s survey shows that 26% of daily global cash is not visible to the corporate treasury. Hence, treasurers are stuck with outdated or inaccurate cash positions.
This leads to:

  • Inaccurate cash flow forecasts
  • Inefficient working capital
  • Incorrect hedging strategies

As a result, companies may lose strategic opportunities. And there can be short-sighted decisions.
An automated cash flow management system is a game-changer for this. It assembles data from different sources into a single system automatically. It also automatically classifies the bank transaction category based on transaction details.

2. Enhance data efficiency through automatic reconciliation

Cash flow management software provides these features in bank reconciliation:

  • Automates reconciliation based on custom and standard tagging rules
  • Maintains bank connections, balances, and account-level reconciliations
  • Handles exceptions via manual reconciliation of transactions and outstanding statement items

3. Faster access to cash and transparent decision-making

Financial transparency is a key advantage of small business cash flow management software. Besides, cash flow management software improves planning by:

  • Providing CFOs with continuous access to data
  • Providing a single data repository for transactions
  • Automating bank reconciliation of cash balances to prior day cash activities
  • Tracking intercompany balances and notional pools
  • Tracking bank signatories
  • Plan for investment and debt based on credit line availability
Chapter 03

Is good cash flow management the only key to survival for businesses?


The power of data defines good cash flow management. Regular cash flow tracking improves the management of investments, assets, expenses, and debt.

In an ever-expanding digital environment, the market is prone to fluctuations. So, small businesses and mid-size businesses must become more agile and transparent to manage daily cash flows. With emerging technologies like RPA, the future of cash management can improve a lot.

With an automation system, business owners or managers can:

  • Focus on high-level issues
  • Analyze how to improve business processes
  • Borrow early
  • Explore future growth scenarios
  • Get accurate data

Benefits of having accurate data

Benefits with HighRadius automated cash flow management software

HighRadius cash flow management software helps SMBs by providing the following features:

  • Effortless integration via APIs and sFTP:
  • It connects with banks, ERPs, and independent market data systems. It processes files in any format and categorizes transactions based on:

    • Banks
    • Accounts
    • Regions
    • Categories

    and displays them in customizable templates.

  • Automation of tedious tasks:
  • Automated bank statement processing and reconciliation help treasury:

    • Save time
    • Detect fraudulent transactions
    • Find discrepancies in bank statements
    • Focus on higher-value tasks
  • Affluent reporting with proactive decision-making:
  • Global cash visibility contributes to better reporting and better long-term management. This also improves credibility with external stakeholders.

  • Increase in profit:
  • Informed and timely acquisition or funding decisions help:

    • lower interest expense
    • increase interest income

    Moreover, the ROI increases due to time and cost savings.

Customer success story

A $10 million global industry leader faced these challenges:

  • Manual effort due to the lack of ability to integrate with the sources
  • High variance in forecasts due to accounts receivables and accounts payable
  • A spreadsheet-based process that lacks scalability
  • No visibility on where the funds are and how much they have

By using the HighRadius cash flow management system, it achieved the following results:

  • Continuous global cash visibility that enabled them to:
    • Make better decisions
    • Manage the vendor payments better
  • Automate recurring tasks
Chapter 01

Why is an automated cash flow management system important for a small or mid-sized company?


SMBs’ current scenario

Small and mid-sized companies account for 40-50% of economic activity in many countries. They generally face problems in having a positive cash flow. Moreover, an SME doesn’t have a specialized finance team with finance directors and accountants. Most treasury employees have a variety of roles in small businesses.
SMBs don’t have individual departments dedicated to budgeting, A/R, A/P, and Payroll. They are also more vulnerable to cash shortages. Hence, they are more burdened with plenty of tasks.

However, with the proper cash flow management services, they can:

  • Solve all cash flow management problems
  • Reduce the risk of insolvency or lack of funds

Automated cash flow management software can guide cash flow planning with reliable data. In this way, businesses can analyze cash on hand and better understand their financial situation.

How do traditional approaches to cash flow management undermine the integrity of small and mid-size companies?

Over the years, the treasury faced many cash flow management system challenges. Many businesses struggle to collect and analyze financial data. SMEs often need access to growth capital during the expansion phase. But they are unable to improve liquidity due to these challenges:

  • Spreadsheet-based process
  • Decentralized data
  • No data visibility, permissions/access control
  • Lean structure of the budget group
  • No effective risk management strategy
  • Poor borrowing

Businesses need to choose the right cash flow management services to improve their daily operations.

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The HighRadius™ Treasury Management Applications consist of AI-powered Cash Forecasting Cloud and Cash Management Cloud designed to support treasury teams from companies of all sizes and industries. Delivered as SaaS, our solutions seamlessly integrate with multiple systems including ERPs, TMS, accounting systems, and banks using sFTP or API. They help treasuries around the world achieve end-to-end automation in their forecasting and cash management processes to deliver accurate and insightful results with lesser manual effort.